Increasing Internet and Smartphone Penetration to Foster Future Growth of Indonesia On-Demand Services Market

The On-Demand Economy is defined as an economic activity created by technology companies that fulfill consumer demand through the immediate provisioning of goods and services. The rising number of individuals making everyday purchases through smartphones will drive the revenue of the on-demand services market in the country. On-demand service providers are faced with many challenges in this market, the most crucial constraint being thin margins. Given their business model and substantial labor needs, reducing margins translates to less profit per transaction. For on-demand service providers, profitability requires significant growth in scale of operations in densely populated areas.

Another important element that on-demand companies need to address to stay ahead of the competition is effective communication. When a customer expects services to be rendered in a fast manner, on-demand companies can’t afford to keep them waiting. In addition, on-demand services must be near users, as proximity is a major logistical issue. As the on-demand economy matures, more successful companies will consume smaller ones. Companies with large capital backing will continue to handle multiple on-demand services at once while pure play companies will look to focus on a single service segment to garner a bulk customer base.  

Ken Research in its latest study, “Indonesia On-Demand Services Market Outlook to 2021” suggests that Go-Jek, Grab and Uber Indonesia will continue to dominate this space. However, these players will witness rising competition from emerging players including Seekmi, HappyFresh and Alfacart in the coming years. 

Indonesia On-Demand Services Market is projected to achieve a positive CAGR of 40.0% during the period 2016-2021. A major factor that will further augment revenues of the on-demand economy and incentivize more companies to enter this space will be the increasing VC funding coupled with companies further developing their own payments gateway.